Soaring 0.73 percentage points in one week, housing demand seems to decline due to interest burden. Real estate brokerage companies cut jobs
Interest rates on U.S. mortgages have risen to over 6% per annum. This is because the US central bank (Fed) is strengthening its policy of raising the key interest rate to catch the high inflation. Real estate companies in the United States are restructuring to cope with the market recession.
As of the 14th (local time), as of the 14th (local time), a media specializing in the real estate market, Mortgage News Daily reported that the average interest rate on a 30-year fixed mortgage in the United States was 6.28% per annum. Compared to the previous week (5.55% per annum), it increased by 0.73 percentage points. It is the biggest weekly gain since the taper tantrum in 2013, according to CNBC.
Expectations that the Fed will aggressively raise interest rates are likely to raise mortgage rates. This is because U.S. Treasury yields, which are linked to mortgage rates, rise. The yield on the 10-year U.S. Treasury bond stood at 3.483% on the same day, the highest since April 2011 in 11 years. During the day, the annual rate was 3.49%. It has risen by 0.513 percentage points in the last five trading days. The yield on the two-year government bond is also at 3.437%, the highest level since 2007.
Home sales are stagnating as mortgage rates rise. According to the National Association of Realtors (NAR), home sales have declined for the sixth straight month.
Real estate brokerage firms took a direct hit as sales fell. Compass and Redfin, the leading US real estate brokerages, have announced their restructuring plans. Compass decided to cut 10% of its employees, or about 450, and Redfin, 6%, or about 470. Redfin chief executive Glenn Kelman explained the reason for the cuts, saying that last month’s housing demand was 17% below our estimate.